about Indian financial system

1. DANTA THOMAS
MACFAST

2. FINANCE AND SYSTEM
 Finance exactly is not money, it is the source of
providing funds for a particular activity.
 A financial system or financial sector functions as an
intermediary and facilitates the flow of funds from the
areas of surplus to the areas of deficit.
 A Financial System is a composition of various
institutions, markets, regulations and laws, practices,
money manager, analysts, transactions and claims and
liabilities

3. Financial System of any country consists
of financial markets, financial
intermediation and financial instruments
or financial products
Flow of funds (savings)
Seekers of funds
Suppliers of funds
(Mainly business firms
(Mainly households)
and government) Flow of financial services
Incomes , and financial
claims

4. Financial System
Existence of a well organized financial system
 Promotes the well being and standard of living of the
people of a country
 Money and monetary assets
 Mobilize the saving
 Promotes investment

5.  An institutional framework existing in a country
to enable financial transactions
 Three main parts
 Financial assets (loans, deposits, bonds,
equities, etc.)
 Financial institutions (banks, mutual funds,
insurance companies, etc.)
 Financial markets (money market, capital
market, forex market, etc.)
 Regulation is another aspect of the financial
system (RBI, SEBI, IRDA, FMC)

6. Constituents of a Financial System

7. Indian Financial System
Non- Organized
Organized
a. Regulators a. Local bankers
b. Financial Institutions b. Traders
c. Financial Markets c. Landlords
d. Financial services d. Pawn brokers
e. Chit Funds

8. FINANCIAL MARKETS
 A Financial Market can be defined as the market in which
financial assets are created or transferred.
 As against a real transaction that involves exchange of money
for real goods or services, a financial transaction involves creation
or transfer of a financial asset.
 Financial Assets or Financial Instruments represents a claim
to the payment of a sum of money sometime in the future and /or
periodic payment in the form of interest or dividend.
 Money Market- The money market is a wholesale debt
market for low-risk, highly-liquid, short-term instrument. Funds are
available in this market for periods ranging from a single day up to a
year. This market is dominated mostly by government, banks and
financial institutions.

9. Capital Market - The capital market is designed to finance the
long-term investments. The transactions taking place in this market
will be for periods over a year.
Forex Market - The Forex market deals with the multicurrency
requirements, which are met by the exchange of
currencies. Depending on the exchange rate that is applicable, the
transfer of funds takes place in this market. This is one of the most
developed and integrated market across the globe.
Credit Market- Credit market is a place where banks, FIs and
NBFCs purvey short, medium and long-term loans to corporate and
individuals.

10. Purpose of the money market
 Banks borrow in the money market to:
Fill the gaps or temporary mismatch of funds
To meet the CRR and SLR mandatory requirements
as stipulated by the central bank
To meet sudden demand for funds arising out of
large outflows (like advance tax payments)
 Call money market serves the role of equilibrating the
short-term liquidity position of the banks